Philip Morris Shares Drop 7% on Lower-Than-Expected Volumes of Zyn Pouches
The tobacco company also said that its total product shipments may be lower in the second half of this year compared with last year, weighed down by an expected 2% decline in cigarette volume for the full year.
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Philip Morris International Second Quarter 2025 Earnings: EPS Beats Expectations, Revenues Lag
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Philip Morris International Shares Tumble: Time to Run for the Hills or Buy the Dip?
Key Points Philip Morris International shares fell after the company's second-quarter report, despite strong earnings and increased EPS guidance. The company is expecting to see cigarette sales volumes decline in the second half. The real story at Philip Morris is about the continued strong growth of Zyn and Iqos. 10 stocks we like better than Philip Morris International › Philip Morris International (NYSE: PM) stock has had a strong 2025 so far, but the shares pulled back after the company reported its second-quarter results. That dip left the stock up about 36% on the year, as of this writing. Is the recent slide a buying opportunity or should investors be running for the hills? Where to invest $1,000 right now? Our analyst team just revealed what they believe are the 10 best stocks to buy right now. Continue » Strong volume growth The Zyn brand remains the driving force behind Philip Morris' robust sales growth. Shipments of the popular nicotine pouches jumped 40% in the U.S. to 190 million cans in Q2, while retail sales volumes (offtake) grew by 26% in the quarter and by 36% in June. Outside of the U.S. and Nordic countries, Zyn shipments more than doubled, and it is now available in 44 markets. Overall oral product shipments climbed 23.8% on a pouch basis. The company said Zyn restocking in the U.S. is now effectively complete. It continues to expect U.S. Zyn shipments to be between 800 million and 840 million cans for the year. Image source: Getty Images The rest of Philip Morris' smokeless portfolio also performed well. Sales volumes of its heated tobacco units (HTUs), including the Iqos system, jumped nearly 9.2% to 38.8 billion units. The company said in-market sales (to end users) jumped 11.4%. Iqos continues to perform well in Japan and Europe and is seeing strong growth in other major cities outside its two main markets. Philip Morris also once again saw shipment growth more than double for its e-vapor product, Veev, driven by pod growth in Europe. Veev is now in 42 markets and holds the No. 1 market share in six European markets. Traditional cigarette volumes, meanwhile, fell by 1.5% to 155.2 billion units. Segment organic revenue, however, grew 2% to $6 billion, and gross profits for the category climbed 5% to $4 billion, as the company's price hikes more than compensated for those volume declines. Overall, organic revenue, which excludes currency effects, acquisitions, and dispositions, rose 6.8% year over year to $10.1 billion. Adjusted earnings per share (EPS) climbed 20% to $1.91. Oral Products (Zyn) HTUs Cigarettes Smoke-Free Total Volume growth 23.8% 9.2% (1.5%) N/A 1.2% Organic revenue growth N/A N/A 2% 14.5% 6.8% HTUs = heated tobacco units. Management maintained its full-year guidance for organic revenue while upping its adjusted EPS forecast. It continues to expect strong results from both Zyn and Iqos, but expects a 3% to 4% decline in traditional cigarette volumes due to ongoing issues in Turkey and Indonesia. The headwind in Turkey is related to supply chain issues following a change in regulatory requirements, while in Indonesia, it's battling to keep market share in the face of growing sales of illicit cigarettes. However, it's still expecting solid gross profit growth from its combustible tobacco business due to its pricing power and cost efficiencies. Metric Prior Guidance Updated Guidance Organic revenue growth 6% to 8% 6% to 8% Adjusted EPS $7.01 to $7.14 $7.43 to $7.56 Adjusted EPS growth* 10.5% to 12.5% $7.33 to $7.46 Volume growth 2% 1% Data source: Philip Morris International. *Adjusted EPS growth excludes currency exchange impacts. EPS = earnings per share. Should investors buy the dip? While investors may have been disappointed by Philip Morris' forecast for steeper declines in cigarette sales volumes in the second half, about half of that is due to a temporary issue around its Turkish supply chain. Meanwhile, the big reason to own the stock is its smoke-free portfolio, led by Zyn and Iqos. Both products continue to demonstrate strong growth and have better unit economics than Philip Morris' traditional cigarette business. It's also expanding these products to new markets, with early signs of success. Importantly, the company is hoping that the FDA will approve the Iqos Iluma for sale in the U.S. later this year, which would set it up to enter this market now that it has reacquired its U.S. rights from Altria. From a valuation perspective, the stock got cheaper when management raised its EPS guidance and its share price fell. The stock now trades at a forward price-to-earnings (P/E) ratio of under 22, based on the analyst consensus for 2025, with a PEG (price/earnings-to-growth) ratio of under 0.35. Stocks with positive PEG ratios below 1 are generally viewed as undervalued. While at the current share price, Philip Morris' dividend has a nice 3.3% forward yield, that's not as high a yield as other tobacco stocks. However, what it lacks in yield, it makes up for by being a unique growth stock in a defensive industry. This is a stock you'll want to own over the long haul, and the dip in the stock price offers a nice buying opportunity. Should you invest $1,000 in Philip Morris International right now? Before you buy stock in Philip Morris International, consider this: The Motley Fool Stock Advisor analyst team just identified what they believe are the for investors to buy now… and Philip Morris International wasn't one of them. The 10 stocks that made the cut could produce monster returns in the coming years. Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you'd have $636,628!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you'd have $1,063,471!* Now, it's worth noting Stock Advisor's total average return is 1,041% — a market-crushing outperformance compared to 183% for the S&P 500. Don't miss out on the latest top 10 list, available when you join Stock Advisor. See the 10 stocks » *Stock Advisor returns as of July 21, 2025 Geoffrey Seiler has positions in Philip Morris International. The Motley Fool recommends Philip Morris International. The Motley Fool has a disclosure policy.
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Here's Why Philip Morris Raises Its 2025 EPS Guidance Again
Philip Morris International PM once again raised its 2025 earnings per share (EPS) guidance following a strong second-quarter performance, driven largely by the continued profitability of the smoke-free portfolio. The company expects an adjusted EPS of $7.43-$7.56, up from the prior stated $7.36-$7.49, indicating 13-15% year-over-year the second quarter of 2025, smoke-free net revenues rose 15.2% year over year, while gross profit for the segment jumped more than 23%. This higher-margin portfolio now contributes 41% to Philip Morris' total net revenues and 42% to gross profit, marking it as a key driver of earnings was broad-based across the company's multi-category smoke-free platform. IQOS delivered a solid quarter, with adjusted in-market sales of heated tobacco units rising 11.4%, supported by global expansion and recovery in Europe's markets like Italy. ZYN also posted a strong rebound, with U.S. consumer offtake up 26% in the quarter and 36% in June, driven by improved in-store availability and renewed commercial PM delivered 16.1% adjusted operating income growth in the quarter, significantly outpacing revenue gains. This performance reflects a combination of strong pricing, improved scale efficiencies and a favorable category mix, particularly the shift toward higher-margin smoke-free products. The raised guidance indicates management's confidence that the recent acceleration in smoke-free category growth is sustainable. It signals a belief that the company's multi-category strategy is gaining traction more quickly than anticipated, supported by strengthening demand. Philip Morris & Competitor's Smoke-Free Strategies Both Altria Group, Inc. MO and Turning Point Brands, Inc. TPB are actively expanding their smoke-free portfolios, though with different scales and specific focuses. Altria's primary driver in this segment is its "on!" nicotine pouch brand, which saw an 18% increase in shipment volume to more than 39 million cans in the first quarter of 2025, expanding the share of the oral tobacco category to 8.8%. To support long-term growth in the modern oral segment, Altria continues to invest in distribution and contrast, Turning Point Brands is demonstrating aggressive growth in its modern oral nicotine pouch sales (FRE and ALP), which increased nearly tenfold year over year in the first quarter of 2025, contributing $22.3 million in revenues. TPB has significantly raised its full-year nicotine pouch sales guidance to a range of $80 million to $95 million. Turning Point Brands is making substantial investments in sales, marketing and potential U.S. manufacturing for its white pouch brands to achieve a significant market share in a category projected to exceed $5 billion. PM's Price Performance, Valuation & Estimates Shares of Philip Morris have lost 10.2% in the past month compared with the industry's decline of 2.2%. Image Source: Zacks Investment Research From a valuation standpoint, PM trades at a forward price-to-earnings ratio of 20.16X, up from the industry's average of 14.67X. Image Source: Zacks Investment Research The Zacks Consensus Estimate for PM's 2025 and 2026 earnings implies year-over-year growth of 14.2% and 11.9%, respectively. Image Source: Zacks Investment Research Philip Morris currently has a Zacks Rank #2 (Buy). You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here. Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Altria Group, Inc. (MO) : Free Stock Analysis Report Philip Morris International Inc. (PM) : Free Stock Analysis Report Turning Point Brands, Inc. (TPB) : Free Stock Analysis Report This article originally published on Zacks Investment Research ( Zacks Investment Research Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
